Needham has begun covering GlobalFoundries Inc. (NASDAQ: GFS) with a Buy rating and set a price target of $55.00, according to a research note published Thursday. At the time of the note, the shares were trading at $48.74, just shy of the 52-week high of $48.88. Recent momentum in the stock has been notable, with data cited showing a 19% return over the past week.
The company reported fourth-quarter 2025 revenue of $1.83 billion, an 8% increase from the prior quarter and at the high end of its guidance range. Management pointed to particular strength in automotive and data center-related businesses as contributors to the quarterly performance. During the period, GlobalFoundries recorded gains in both wafer shipments and average selling prices.
On a non-IFRS basis, gross margins improved to 29.0% in the quarter, up 300 basis points sequentially. Needham attributes that margin improvement to a stronger product mix and higher facility utilization. These operational improvements factor into Needham's expectation that calendar year 2026 will be a growth year for the company, despite guidance that first-quarter 2026 revenue will be seasonally lower.
Needham noted the smart mobile segment may face moderation in revenue, tied to potential declines in smartphone unit shipments related to memory pricing dynamics. The firm expects that weakness to be offset by continued expansion in automotive and data center segments, and highlighted silicon photonics as an area of particular optimism. Needham projects silicon photonics revenue will double in calendar year 2026 and uses a valuation that equates its $55 target to roughly 26 times its calendar year 2027 non-GAAP earnings per share estimate of $2.08.
GlobalFoundries' fourth-quarter 2025 results also exceeded market expectations on the bottom line. The company reported earnings per share of $0.55, beating a consensus forecast of $0.48 by approximately 14.58%. Revenue of $1.83 billion topped the $1.8 billion that had been anticipated by analysts.
Other broker commentary has followed the results. Baird raised its price target for GlobalFoundries to $60 while maintaining an Outperform rating, citing drivers such as silicon photonics and gains in the automotive segment. Wedbush lifted its target to $50 and kept a Neutral rating, pointing to improved conditions in the mature foundry market. Both firms' recent moves underscore a broadly constructive view among some analysts about the company's trajectory.
Summary of the key financial and market points from recent coverage and results:
- Fourth-quarter 2025 revenue: $1.83 billion, up 8% quarter-over-quarter and at the high end of guidance.
- Non-IFRS gross margin: 29.0%, a 300 basis point sequential improvement.
- Q4 EPS: $0.55, above the $0.48 consensus.
- Needham price target: $55, implying 26 times calendar year 2027 non-GAAP EPS of $2.08.
- Other analyst targets: Baird $60 Outperform, Wedbush $50 Neutral.
Investors and market participants will be watching first-quarter 2026 guidance and early 2026 execution, as well as the trajectory of silicon photonics and automotive and data center demand to determine whether the expected growth cadence materializes across the year.